This is an Op-Ed by Stephan Livera, Host of the “Stephan Livera Podcast” and Managing Director of Swan Bitcoin International.
As the chapter of 2022 closes, it’s time to turn our eyes to what’s next in 2023. Here are some themes I’m looking at for Bitcoin in 2023.
Regulatory overreach
The Financial Action Task Force (FATF) travel rule is forcing exchanges and bitcoin service providers to increasingly document and share information about customer transactions. We are seeing politicians like Elizabeth Warren go publicly against Bitcoin, and even if her digital asset AML bill has no real chance of passing, it portends future battles over this.
But, on the other hand, we must also remember that governments were initially against Voice over Internet Protocol (VoIP) technologies (for example, Skype, etc.), and nowadays they use VoIP. It will be similar with bitcoin, where some countries adopt it as legal tender, hold bitcoin in reserves, provide bitcoin services for citizens, and encourage bitcoin investors and entrepreneurs.
CBDC and the war on cash
The cash income war, with many countries taking high denomination banknotes out of circulationeither prohibit physical cash transactions above a threshold. There are many countries talking about trials of central bank digital currency (CBDC), but my speculation is that most will not have the general technical and economic capacity to deal with a fully operational CBDC in 2023.
2023 will be mostly about testing and rhetoric, in preparation for future CBDC launches. Governments can especially force people into CBDCs in countries with large welfare states, with the understanding that “if you want your welfare check, you’ll take it like a CBDC.” Like Darth Vader in “Star Wars,” it will be a case of “Pray he doesn’t tamper with the deal any further.”
CBDCs might once have been seen as a “conspiracy theory”, but now they are clearly becoming a threat to financial freedom and privacy. Sadly, most people won’t see the threat until it’s too late and CBDCs are upon them, but it’s also the pain of CBDCs that will push more people to use Bitcoin and the Lightning Network.
Maxis are minted and the resurgence of interest in self-custody
Bitcoin maximalists are minted as casual “crypto” fans go wild on platforms like Celsius, BlockFi, FTX, Voyager, Vaultetc. So in a way, it’s very cyclical, the 2014 to 2015 bear cycle followed after the Mt. Gox crash, and during the 2018 to 2019 bear cycle, we saw the QuadrigaCX crash, so we’re just going through another round of people who have to learn the hard way.
By 2023, we will see a stronger culture of self-care given that the pain of 2022 is more recent. This is not to prevent future cycles and waves of new adoptions with people who aren’t as careful. Yield and shitcoin scams will return in another guise sooner or later, but it will be a new round of people succumbing to them.
We are seeing more rounds of content and webinars related to self-care. For example, with Swan Bitcoin I hosted some self stewardship webinars 101 (to be continued), and these webinars had some of the highest interest and enrollment from some Swan webinars ever offered. Offering an easy automatic withdrawal feature or being 100% non-custodial will be a major feature for Bitcoin on-ramps in 2023.
Miniscript Wallets and Features
For Pieter Wuille site:
“Miniscript is a language for writing (a subset of) Bitcoin Scripts in a structured way, allowing for parsing, composition, generic signing, and more.”
For those unfamiliar, Miniscript is a way to more easily express different scripts or spend conditions for bitcoin. This could be integrated into different wallets in a way that allows for easier compatibility between hardware and software.
You might first think, “Why should I care?” and, at first, you would be right to ask that. But over time, this will allow for more sophisticated scenarios of self-custody, business, or even estate planning. Do you want to have a three-out-of-three multisig setup that scales down to a two-out-of-three multisig setup after 90 days? Or do you have different “fallback” conditions that exist for a business context? Miniscript does it easier to do these things and allow people to use your existing software or hardware for this purpose. To be clear, some of this is already possible with Bitcoin script today, but Miniscript makes it technically more feasible or easier to achieve in practice.
These solutions will take time to develop, but the functionality looks promising. Businesses and enterprise customers may be particularly interested in this because it could make their self-custody practices more practical for employees and key holders to run.
Currently there Liana (by the same team behind Revault), and Ledgerthat you have announced support for Miniscript on your hardware, and Specter DIY had already enabled support in 2021! Rob Hamilton has also spoken about the uses of Miniscript in the insurance world. here. I anticipate more support in 2023.
This could help drive bitcoin usage towards self-custody addresses and away from the “old model” of financial services where you have to trust more of the government, banks and fiat financial institutions to keep their word or not debase your wealth.
lightning first
It’s time to build a first Lightning model for two types of bitcoin transactions: low-value transactions and in-person trading. We saw the mempoolfullRBF debate erupt towards the end of 2022, but the real answer for most of us is to promote and use Lightning first, whenever possible.
As a quick anecdote, I remember talking to Giacomo Zucco who was explaining his experience in El Salvador paying with bitcoin in a supermarket. Unfortunately, Chivo’s terminal at the time defaulted to Bitcoin on-chain, and since he paid on-chain, the people in line behind him had to wait for confirmation, which was very awkward. Compare this to a Lightning-first experience that might look more like this:
We should show people the best of Bitcoin and for lower value in person trading we should go for Lightning first. I think we will start to see this being driven and encouraged by more Bitcoiners and local communities in 2023.
Expansion of exclusive Bitcoin communities and events
We will see more small-sized events and conferences in different countries around the world. Contrary to some who believe that there are too many Bitcoin conferences, the problem is rather assuming that you have to attend all of them!
Instead, you should attend events and conferences that align with your interests and/or geography. Having more conferences is a good thing, as long as they are done in an effective and low-cost way. For example, him Bitcoin bush bash it’s a model we can see replicated around the world: free attendance, held in a lounge or other free/cheap area, no recording, smaller meeting held somewhere that is profitable.
By lowering expectations on things that typically cost a lot more money (eg, sophisticated and professionalized operations, live streaming, lots of international speakers), Bitcoiners can grow their local scenes and meetups. This is not to detract from the larger Bitcoin events and conferences, as they also play a key role, but I see a “middle ground” that can be filled by low-cost local events.
overall feeling
Without having a crystal ball for 2023, I believe that the bitcoin fiat price will remain in a mostly sideways trend. Forget what the bull-hopium folks are posting and talking about, they are usually chasing engagement or getting too caught up in their own echo chambers. It takes time for the cycle to bottom out.
But let’s look on the bright side, it’s a good time to stack sats and build something. Remember, in previous cycles, it was not so clear that “Bitcoin would come back”, whereas now, the world is slowly realizing that Bitcoin is here to stay.
This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
